Sunday, August 18, 2019
Financial Analysis Essay -- essays research papers
Financial Accounting MidTerm I.     Debit vs. Credit A.     Debit Debit = left side of T-account On the Balance Sheet a debit indicates: 1.     An increase in an asset 2.     A decrease in a liability 3.     A decrease in shareholders’ equity item B.     Credit Credit = Right side of T-account On the Balance Sheet a credit indicates: 1.     A decrease in an asset 2.     An increase in a liability 3.     An increase in shareholders’ equity item ** HINT** - Identify two components of each transaction: 1.) what did you get; 2.) where did it come from. The debit is what you got, and the credit is the source of the item you received. For instance, let’s imagine that you purchase a computer with your credit card. Since the computer is what you received it’s going to result in a debit to the asset account for your computer. The credit will be applied to the credit card liability account for the same amount. II.     What accounts Increase/Decrease with debits and credits      Account Type     Debit      Credit Balance Sheet     Assets      Increase     Decrease Balance Sheet     Liabilities     Decrease     Increase Balance Sheet     Owner’s Equity     Decrease     Increase Income Statement     Revenue     Decrease     Increase Income Statement     Cost of goods sold     Increase     Decrease Income Statement     Expenses     Increase     Decrease III.     Typical Accounts A.     Assets Cash     Marketable Securities Accounts receivable      Notes receivable Interest Receivable  &nb... ...ccounts decrease cash and appear with negative signs. 2) Step 2: Classify the change in each balance sheet account as an operating, or investing, or financing activity and enter it in the appropriate column of the work sheet using the same sign as the first column. 3.) Step 3: Sum the entries in the Operations, Investing, and Financing Columns and net the 3 sums to ensure that they equal the net change in cash. ***Things to Remember*** In T-accounts the balance are as follows:      Asset: balance on the left      Liability: balance on the right      Stockholders’ equity: balance on the right Balance Sheet is written as follows:      Assets      Liabilities      Stockholders’ equity Income Statement is written as follows:      Sales      Other Revenue      Cost of Goods Sold      Expenses      Net Income Statement of Cash Flows (Indirect Method) is written as follows: Operations Investing Financing
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